Somewhere between this nightmare and our own, different one, lies the answer:

If hell had a special section reserved for recording industry executives, it would probably look a lot like Tepito.

The Mexico City neighborhood is a mile and a half of exuberant, unabashed intellectual-property piracy: thousands of people eddying through a labyrinth of street stalls, buying CDs, movies and software at a tiny fraction of the legal price.

It’s also the center of a nationwide piracy business that the Recording Industry Association of America and other groups say probably took almost a billion dollars from the music, film and software industries last year — a business that is almost single-handedly killing Mexico’s music industry, crushing legitimate record sales, and sending potential stars fleeing from the country.

Stumble long enough through Tepito’s maze of poorly erected street stalls and taco stands, and you might come upon Discos Medellin, a modest little shop where Guillermo Lopez quixotically sells original, nonpirated music for about nine dollars a CD. Lopez, a connoisseur of salsa, has been running the shop for 13 years and has seen sales fall from an average of maybe 60 discs a day a few years ago to about 15 a day now.

….Mexico is the third-biggest market in the world for pirated music. Almost 70 percent of the music sold in Mexico is copied (most of it in Tepito), and that figure has been climbing pretty steadily for five years. In May the office of the U.S. Trade Representative added Mexico to its list of flagrant intellectual-property violators.

Recent music sales figures in Mexico would make an American record executive cringe. According to Amprofon, the organization that represents the big international record companies in Mexico — like a local RIAA — CD sales fell about 16 percent in 2001, and almost 18 percent in 2002. Internal estimates for this year paint an even uglier picture — the market is expected to shrink by almost a third in the first half of 2003.

Those are apocalyptic numbers. And they’ve got people in the record industry here speaking in apocalyptic tones.

….”About three years ago, the piracy started to really explode — personally, my sales went down 70 percent in the space of one year,” he says. The business folded with predictable speed after a plunge like that, and Honerlague opened a joint venture with Sony, selling some of his own Mexican artists like Tatiana and a lot of foreign-catalog discs like Santana.

Honerlague blames the cheap consumer CD burner for killing his last business and wreaking havoc on the recording industry. But relatively weak copyright laws and inadequate enforcement have also contributed to what he believes will be a long-lasting change in how the music industry does business in Mexico.

….The stakes are huge in Mexico’s fight. American enthusiasts of free-for-all copying have often argued that a relaxed attitude toward copyright in the information age may hurt established artists but may encourage or help newer acts. If anything, the Mexican experience is the opposite. Mexican record company executives say widespread piracy has forced them to stop developing new talent and focus on their stable of recognized artists to make a profit.

Artists who want to become Spanish-language music stars have always seen the enormous Mexican market as a first, necessary conquest, but executives like Honerlague say piracy is pushing the artists out — to more reliable markets like the United States. Meanwhile many local and international companies are retrenching, trying to squeeze what profits they can out of already established acts, instead of risking big money on creating new ones.

“Artists don’t appear by miracle,” he says. “There’s a whole apparatus of promotion, of marketing, behind them. We can’t risk as much as before. Now we have to be much more selective with what we record.”

….Apart from the economic questions, there’s something the authorities are just starting to get, which is the damage to the musical culture of Mexico,” says Amprofon’s Davalos. “Now there isn’t creation of new talents, new figures of music. The Mexican musical tradition is being lost.”

If Mexico’s experience with piracy is any guide, the U.S. recording industry is in for some big changes. Mexico’s response has been two sided: Push as hard as possible to take out the big mafias that control the manufacturing of illegal CDs, but at the same time, slash investments in new artists, reduce staff and pay, and thereby stop charging music fans so much for a CD.

So far, the American recording industry has mostly followed the first, get-tough, half of this prescription — pushing as hard as possible to take out the Napsters and the Kazaas that control the distribution of pirated music — but they haven’t really followed up with the other, get-cheap, half. [Salon]

This is deeply serious stuff – though thee are many differences between Mexico and the U.S., this is what can happen when copyright becomes utterly worthless. We need to find a compromise where creators get paid, consumers have reasonable copying and trading rights, and creativity continues to be fostered.

About Eric Olsen

Career media professional and serial entrepreneur Eric Olsen flung himself into the paranormal world in 2012, creating the America's Most Haunted brand and co-authoring the award-winning America's Most Haunted book, published by Berkley/Penguin in Sept, 2014.
Olsen is co-host of the nationally syndicated broadcast and Internet radio talk show After Hours AM; his entertaining and informative America's Most Haunted website and social media outlets are must-reads: Twitter@amhaunted, Facebook.com/amhaunted, Pinterest America's Most Haunted.
Olsen is also guitarist/singer for popular and wildly eclectic Cleveland cover band The Props.